BP Plc (LON:BP) dropped after it warned of “significantly lower” refining margins and predicted a writedown on the value of a plant in Germany of $1 billion to $2 billion.
Lower profits from making fuels such as diesel and higher levels of maintenance will have an adverse impact on BP’s second-quarter earnings from oil products of $500 million to $700 million, the company said in a statement on Tuesday. Results from oil trading are expected to be weak, it said.
Shares of the company fell 2.7% to 461.7 pence as of 8:41 a.m. in London, in a broadly weaker market for oil and gas companies.
BP’s post-tax impairment charge relates to the review of the Gelsenkirchen refinery in Germany, which was announced earlier this year. The company plans to scale back its refining operations in the country due to high costs and declining demand for fuels.
© BloombergThe Gelsenkirchen complex will become the second German plant to reduce crude consumption starting 2025, with Shell Plc (LON:SHEL) working on a similar move at a nearby facility. European refiners face increasing competition from fuel imports originating in the Middle East and Asia, where capacity is being increased.
BP also said Tuesday that upstream production in the second quarter is now expected to be “broadly flat” compared with the prior quarter. Gas marketing and trading is likely to be “average,” according to the statement.
BP’s results are expected to be published July 30.
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